how good is to buy a franchise?

Answer 1

speaking from experience...i origionally had no business experience but decided to go with a subway restraunt. I figured it was pretty simple and i had to go to their school for 2 weeks and like someone else already said, follow all there rules...which were preven to be good rules...well with a franchised business you have to pay a % of your profits to the Franchisor and like with subway, you also have to pay an advertising % every week. at first before i knew the business it didn't bother me to fork over that money BUT before long when i knew all ablut it for the most part...i HATED giving it to them...so you just have to think about stuff like that...sometimes tho depending on the type of business you are thinking of...the name sells

Answer 2

Buying a franchise offers some definite advantages but at a cost.

Depending on the service/product a franchise will allow you to buy into an existing brand that has an established market presence.

This can be invaluable when it comes time to open the doors.

The other benefits are training, supplies, marketing plan, and often times financing options that help get you off the ground. Again, it depends on the franchise but a lot will offer you a pre-established business model that will lay out all the steps for you.

The downside is the cost. As noted by other posters the franchisor often time gets a % of sales and other management/marketing fees that are non-negotiable (it's like paying your electric bill - you have to do it or you get no electricity).

They also stipulate that you sell their product/service and theirs ALONE. If it's a sub-shop then you sell to their menu, by their standards, and their decisions so it leaves you very little room to be creative and break out of the mode.

I hesitate to call a franchise "turn-key" but it's very close to it. They offer a support network and business operation model that can really help new business owners.

If you can live within their guidelines and rules you may find yourself very happy. If, however, you want the ability to truly call your own shots, market the way you want to market, price, and sell the goods you want when you want then you might find them a bit too limiting.

Good luck!

Answer 3

Here are my thoughts as a former franchisee and someone who's done extensive research on franchising:

Whether it’s worth investing in a franchise can only be answered after the fact. The best way to truly assess whether to buy any franchise is to speak directly with several (at least six, preferably more) franchisees for the company you are considering.
A self-examination as to whether owning a business is what you really want is also essential, as is a very thorough due diligence. Here are 10 steps that should be taken by anyone considering investing in a franchise:

1 - Conduct due diligence on yourself
2 - Find a great accountant
3 - Find a great attorney specialized in franchise law
4 - Conduct due diligence on the business
5 - Refresh and enhance your business acumen
6 - Write a business plan
7 - Identify and hire a great team- then create a culture to retain it
8 - Hone your leadership skills
9 - Hone your sales skills
10 -Create a schedule that allows some time for family and friends

Some other information you may find helpful:

Most franchise contracts are 10-year commitments for which the franchisee has virtually no rights. They're structured such that the franchisee has very little latitude or say in how the business is operated. You have flexibility to hire your staff, manage them and set your own prices, but most everything else, from displays to products you may/may not carry to signage/advertising, equipment, technology, etc. is usually either governed by or subject to the approval of the franchisor. It's not like owning your own business, it's more like being a store manager who, if the business is profitable, takes home most of that. And if the business is not profitable and you want to sell it or close it after five years, these are both very difficult to do. The former is usually via either a very large fee (an example is a local franchisee who paid $100,000 to terminate his franchise contract with one of the more popular women's fitness center franchises) or personal bankruptcy (franchise contracts generally require you that you be personally liable your business debts, not just through whatever type of corporate entity you might establish; e.g., LLC, S Corp., Partnership, etc.). The latter option of selling your franchise is generally accomplished only at a very large discount.

There are dozens of things to investigate when considering investing in a franchise, but here are some fundamental questions to ask current franchisees:

About how many hours per week do you dedicate to your franchise business?

How would you describe your relations/communications with your franchisor?

Is the franchisor fair with you in resolving any grievances?

Are territories equitably granted?

How would you describe the initial and ongoing training provided by your franchisor?

In what ways could the parent company most improve?

Is your income A) more, B) less or C) about what you expected prior to opening your business?

If you could turn back time to the day you signed your franchise agreement, would you make the same decision to buy your franchise?

The last one is of course the most important. There are many very happy, wealthy franchisees out there, but it's not a guaranteed formula for success. Every opportunity is unique and requires extensive due diligence of both the franchise itself as well as the regulations governing the industry. If you have more specific questions, please feel free to contact me.

Good luck.

Answer 4

That depends on what you are looking for. Franchised things have almost gauranteed profit margins done correctly, but they also have limits to what you can do, and how much you are going to make per year, etc. If you were to take McDonalds for instance, then you would only make a certain amount per year max, because of the nature of the business. If you were to start your own, you have no ceiling, but there's also nothing saying that you'll be successful. It depends on how much of a risk taker you're willing to be.

Answer 5

Can't go wrong with a Starbucks. Could put it in the middle of nowhere and it would draw a crowd